Cyprus | Anti-Suit Injunctions

For long the traditional approach of English Courts, following Pena Copper Mines Ltd v Rio Tinto Co Ltd (1911) 105 LT 846 has been to protect the sanctity of agreements between parties in the event a dispute occurred through the method of safeguarding an arbitration agreement against the commencement or threat of parallel proceedings launched in a foreign jurisdiction, by making an order  for anti-suit injunctions restraining in that way that party from commencing or continuing proceedings in breach of the arbitration agreement. It has been established that anti-suit injunctions are not directed at the foreign court following Turner v Grovit [2002] 1 WLR 107 and they do not call into question the jurisdiction of the foreign court, they are granted under the in personam jurisdiction of a court of equity further to Societe Nationale Industrielle Aerospatiale v.Lee Kui Jak and Another (1987) A.C 87. One of the underlying principles in terms of granting an anti-suit injunction is that jurisdiction is exercised “where it is appropriate to avoid injustice”, or where the foreign proceedings are “contrary to equity and good conscience”. The Court will also restrain proceedings which interfere with “the due process of the court” or even where foreign proceedings are “oppressive or vexatious” following  Sout Insurance Co v Assurantie Maatschappij de Zeven Provincien NV [1987] 1 AC 24. 

The English courts held that anti-suit injunctions in support of arbitration agreements fell outside the Brussels Regulation (No. 44/2001) because they were caught by the arbitration exclusion in Article 1(2). Particularly in Turner v Grovit,  it was held that the anti-suit injunction was inconsistent with the Brussels Convention considering that they are equivalent to restraining the foreign proceedings themselves. However in Allianz SpA v West Tankers Inc (2009) 1 A.C. 1138, the ECJ held that it was incompatible with the Brussels Regulation for a court of a Member State to make an order to restrain a  person from commencing or continuing proceedings before the court of another Member state on the ground that such proceedings would be contrary to an arbitration agreement. This development narrowed significantly the scope of English Courts to grant an anti-suit injunction against a party located in an EU Member State.  This brought the jurisprudence relating to anti-suit injunctions in support of arbitration agreements into line with the jurisprudence relating to exclusive court jurisdiction agreements. In Gazprom OAO v Lithuania (C-536/13) [2015] All ER (D) 136 without addressing the matter directly, it was confirmed that it was not incompatible with the Brussels Regulation for a Member State to recognize and enforce an anti-suit injunction granted by an arbitral tribunal since arbitration does not fall within the scope of the Brussels Regulation.

Cyprus has adopted the English Courts’ approach since 1995 on the issue to the regulation of power of the Courts of the Republic of Cyprus to issue anti-suit injunctions. This was further analysed in the cases of Gastro Shipping Company Ltd- v- Mineaq SQM( Africa)( Proprietary) Ltd & Another (1999) and Gannet Shipping Ltd-v- Naafi& Others(1995) 1 CLR 10.

Paphos and Limassol District Courts have formed the view that anti-suit injunctions must be issued sparingly and the plaintiff must have a very strong case as in the case of Alexey Suprunov and other v. Natasa Agathokleous and other, Action No. 870/2014 which was also confirmed in the case of Stockman Interhold S.A and Arricano Trading Limited and others, Action No. 219/12. Further in PVHC Limited v Mark McCourty, Action No. 5621/2012 the court adopted the case of Donohue v Armco Inc [2002] 1 All ER 749 and rejected the application among other factors on the basis that third party interests that are not involved in the arbitration agreement are not bound by the exclusive jurisdiction clause and no anti-suit injunction can be grated on that basis.

In relation to anti-suit injunctions outside the EU it seems that the courts are prepared to preserve the use of anti-suit injunctions where possible.  Following Donohue v Armco Inc [2002] 1 All ER 749 and AES Ust- Kamenogorsk Hydropower Plant LLP v Ust- Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889 the court will ordinarily grant an anti-suit injunction to restrain foreign proceedings, other than those brought in a foreign court within the Brussels/ Lugano regime, unless the respondent can show strong reasons for suing in the foreign court. Further, in the case of Roger Shasoua, Rodemadan Holdings Limited, Stancroft Trust Limited v Mukesh Sharma (2009) EWHC 957 the court held that English law in relation to proceedings which did not take part in the European Community was not inconsistent with the Regulation or the Convention. This position was also confirmed in Skype Technologies v Joltid Ltd & others (2009) EWHC 2783, where the English Courts issued an anti-suit injunction blocking the continuation of legal proceedings in the United States and the case of Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66, where the Court of Appeal granted an anti-suit injunction restraining Tunisian proceedings brought in apparent breach of an arbitration agreement. In the case of Aes Ust- Kamenogorsk Hydropower Plant LLP-V-Ust-Kamenogorsk Hydropower Plant JSC (2010) EWHC 772 proceedings were outside the scope of the EU, and AES successfully issued proceedings in the English courts for an anti-suit injunction to restrain the proceedings in Kazakhstan. Recently in Magellan Spirit ApS v Vitol SA “Magellan Spirit” [2016] EWHC 454 (Comm) it was held that a non-contractual consensus would not give the owner any legal right not to be sued in Nigeria, let alone a right capable of being enforced by an anti-suit injunction. A binding contract of which the trader’s suit against the owner constituted a breach is necessary to establish such a right. It followed that the instant court had no jurisdiction to try the trader’s cargo claim and the owner had no contractual right not to be sued on that claim in Nigeria.

Furthermore, in The Aggeliki Charis Cia Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyds Rep. 87, Grace Millett LJ emphasized that an anti-suit injunction would be granted provided that it is sought promptly and before foreign proceedings are too far advanced. In Essar Shipping Ltd v Bank of China Ltd 2015 EWHC 3266 (Comm) it was considered that applicants for an anti-suit injunction had to bring the proceedings promptly. Lack of promptness would increase the danger of the injunction being perceived as an inappropriate interference with a foreign court’s jurisdiction, and delay alone was a sufficient reason for domestic courts to refuse an injunction. Recently, in ADM Asia Pacific Pte Ltd (formely known as Toepfer International Asia Pte Ltd) v PT Budi Semesta  Satria [2016] EWHC 1427 (Comm) adopting Ecobank Trasnational Incorporated v Tanoh [2015] EWCA Civ 1309 it was established that a general discretion to refuse an anti-suit injunction on the grounds of delay in making the application exists. In both cases the applications for anti-suit injunctions were dismissed.

Therefore, it seems to be the position of the courts as per the case law that anti-suit injunctions may be used in Cyprus only against parties for legal proceedings pending before Courts of non EU Member State where the applicant has a very strong case.  Considering the approach of Cyprus Courts, anti-suit injunctions should be used sparingly with great restraint, recognizing the need to uphold respect and comity for foreign states and their courts.

Author: Alexandra Savva